[1] In a case where a penalty surcharge is not mitigated because a reason for discretionary mitigation of a penalty surcharge under the proviso of Article 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name exists, even if there is a reason for discretionary mitigation of a penalty surcharge, whether the imposition of the penalty surcharge is unlawful by deviating from and abusing

[2] In a case where the full amount of a penalty surcharge calculated pursuant to the main sentence of Article 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder's Name is imposed on a social welfare foundation that held a title trust of a property contributed by an administrative agency, on the ground that Article 3 of the Act on the Registration of Real Estate under Actual Titleholder's Name

[3] In a case where the imposition of a penalty surcharge against a title truster is illegal because of the deviation from or abuse of discretion, whether the court can only revoke the penalty surcharge exceeding the part deemed reasonable by the court (negative)

[1] The proviso of Article 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name, which imposes a penalty on a title truster who violates the duty of registration of the name of the person having the actual right, is apparent to be a discretionary reduction provision. Thus, even if the grounds for reduction exist, if the imposing authority imposes a penalty surcharge in full without reducing the penalty surcharge even considering the grounds for reduction, it cannot be readily concluded that it is unlawful. However, if the imposing authority did not take into account the above grounds for reduction, but did not reduce the penalty surcharge in full, it is an illegal disposition that deviates from or abused the discretionary authority.

[2] In a case where the total amount of penalty surcharges calculated pursuant to the main sentence of Article 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder's Name is imposed on a social welfare foundation that held a title trust on the property donated by an administrative agency, on the ground that Article 3 of the Act on the Registration of Real Estate under Actual Titleholder's Name was violated, the case holding that the imposition of penalty surcharges is illegal disposition that deviates from or abused discretionary power, on the ground that the above social welfare foundation held a title trust for the purpose of avoiding an administrative disposition, such as cancellation of permission for establishment following a non-performance of the conditions for the establishment of the foundation, or that it cannot be deemed that it held a title trust for the purpose of evading taxes or avoiding restrictions under the proviso to Article 3-2 of

[3] Where a title trust does not evade taxes or avoid restrictions under the laws and regulations, and there are grounds for reduction of penalty surcharges under the proviso of Article 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name, whether to reduce penalty surcharges falls under the discretion of the authority imposing the penalty surcharges, and where the authority imposing the penalty surcharges deems that the imposition of the penalty surcharges is unlawful because it deviates from and abused the discretionary power while rendering a judgment, the court is bound to cancel the entire imposition of the penalty surcharges, and the court cannot cancel the penalty

[1] Articles 3(1) and 5(1) of the Act on the Registration of Real Estate under Actual Titleholder’s Name; Article 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name / [2] Articles 3(1) and 5(1) of the Act on the Registration of Real Estate under Actual Titleholder’s Name; Article 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name; Article 27 of the Administrative Litigation Act / [3] Articles 3(1) and 5(1) of the Act on the Registration of Real Estate under Actual Titleholder’s Name; Article 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name; Article 27

[1] Supreme Court Decision 2005Du3257 Decided September 15, 2005 (Gong2005Ha, 1634) / [3] Supreme Court Decision 98Du2270 Decided April 10, 1998 (Gong1998Sang, 1377) Supreme Court Decision 2005Du3172 Decided October 26, 2007 (Gong2007Du18062 Decided June 23, 2009)

Social Welfare Foundation

The State Market

Gwangju High Court Decision 2009Nu2282 decided March 25, 2010

The judgment below is reversed, and the case is remanded to the Gwangju High Court.

1. We examine the grounds of appeal.

Article 3(1) of the Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Real Estate Real Name Act”) provides that “No person shall register any real right to real estate in the name of the title trustee pursuant to the title trust agreement,” and Article 5(1) of the said Act provides that any title truster who violates the provisions of Article 3(1) shall impose a penalty surcharge within the limit of an amount equivalent to 30/100 of the value of the relevant real estate on him/her. In addition, the proviso of Article 3-2 of the Enforcement Decree of the said Act provides that a penalty surcharge may be mitigated by 50/100 if it is not for the purpose of evading taxes or avoiding the restrictions pursuant to

However, since the proviso of Article 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Name is clearly a provision for discretionary mitigation, if the imposing authority imposes a penalty surcharge in full without considering the grounds for mitigation even if the above grounds for mitigation exist, it cannot be readily concluded as unlawful. However, if the imposing authority did not consider the above grounds for mitigation at all despite the existence of the above grounds for mitigation, or did not reduce the remaining penalty surcharge that did not constitute grounds for mitigation, the imposition of the penalty surcharge is an illegal disposition that deviates from or abused by discretionary authority (see Supreme Court Decision 2005Du3257, Sept. 15, 2005).

According to the reasoning of the judgment below, the plaintiff obtained the permission of incorporation from the Gwangju Metropolitan City Mayor on May 7, 2007, and obtained conditional permission to sell the real estate of this case, which is an ordinary property at the time of its establishment, and appropriate it as construction expenses and operating expenses, and if it is not performed, the permission of incorporation may be revoked. The Gwangju Metropolitan City Mayor sent a public notice to the effect that on May 1, 2008, the Gwangju Metropolitan City Mayor may be subject to administrative disposition, such as revocation of the permission of establishment, if the plaintiff fails to fulfill the above conditions of permission. The plaintiff tried to sell the real estate of this case at a temporary directors meeting on May 7, 2008 by the resolution to sell it at a price below half of the appraised value, but failed. Accordingly, around August 21, 2008, the defendant imposed the penalty surcharge of this case on Nonparty 1 and 2, and on March 19, 2009, the defendant imposed the penalty surcharge of this case on the ground that the plaintiff under title trust of the real estate of this case and imposed the penalty surcharge of this case.

In the same way, the plaintiff is deemed to have held title trust on the real estate of this case for the purpose of avoiding the administrative disposition such as cancellation of the permission for establishment following the non-performance of the conditions for the establishment of a corporation, and cannot be deemed to have held title trust with the intent to evade taxes or avoid the restrictions under the law. Therefore, the plaintiff has the grounds to reduce the penalty surcharge under the proviso of

However, in calculating the penalty surcharge of this case, the defendant is found to have imposed the full penalty surcharge calculated in accordance with the main sentence of Article 3-2 of the Enforcement Decree of the Real Estate Real Name Act, because the defendant mispers that the grounds for reduction of the penalty surcharge of this case were not considered at all or that it does not fall under the grounds for reduction. Thus, the disposition of this case

Although the judgment of the court below is somewhat inappropriate in its reasoning, it is justified in its conclusion that the disposition of this case on which the penalty surcharge was imposed is unlawful, with excessive reduction of the penalty surcharge under the proviso of Article 3-2 of the Enforcement Decree of the Real Estate Real Name Act.

The court below did not err in the misapprehension of legal principle as alleged in the ground of appeal.

2. The decision shall be made ex officio;

In the event that the title trust does not evade taxes or avoid restrictions under the laws and regulations and there are grounds for reduction of penalty surcharges under the proviso of Article 3-2 of the Enforcement Decree of the Real Estate Real Name Act, whether to reduce penalty surcharges falls under the discretion of the authority imposing the penalty surcharges. In the event that the authority imposing the penalty surcharges recognizes that the imposition of penalty surcharges is illegal as it deviates from and abused discretion in its determination, the court is bound to cancel the imposition of the penalty surcharges in its entirety, and the court cannot cancel the penalty surcharges only for the portion exceeding the reasonable part (see, e.g., Supreme Court Decisions 98Du2270, Apr. 10, 1998; 2005Du3172, Oct. 26, 2007).

According to the reasoning of the lower judgment, the lower court maintained the first instance judgment that revoked the part exceeding KRW 21,474,00 among the disposition imposing the instant penalty surcharge, on the ground that the Plaintiff has grounds for reduction of penalty surcharge under the proviso of Article 3-2 of the Enforcement Decree of the Real Estate Real Name Act, and thus, the penalty surcharge of KRW 42,948,00 imposed on the Plaintiff ought to be mitigated to 50/100 (= KRW 42,948,000 x 50/100).

Such determination by the court below is erroneous in the misapprehension of legal principles as to the revocation of penalty surcharges, which affected the conclusion of the judgment.

3. Conclusion

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yang Chang-soo (Presiding Justice)